00:02
Hello, in this video, we are trying to explain a statement, which is about the difference between long -run supply curve and short -run supply curve.
00:13
So the statement says that in a perfectly competitive market, the long -run supply curve is always flatter than the short -run supply curve.
00:23
Why is that? so i'm going to just first draw a long -run supply curve versus.
00:31
A short -run supply curve just to give you some picture of a flat and a less flat supply curve looks like supply this is long run and in the short run supply curve is more steep so supply short run what does a flat supply curve means? a flat supply curve actually means supply elasticity is greater.
01:23
And in the short run, when we have a steep supply curve, the supply elasticity is relatively smaller.
01:37
And for those of you who forgot about the definition of elasticity, elasticity means how sensitive of supply is to price change.
01:54
So given the same units of price change, let's say the price change by one unit.
02:13
And we can see that in the short run, when the price increase, by let's say this unit, this amount of price change, p to p prime.
02:25
We see that in the short run, the change in supply is this q, i would say delta q.
02:35
And in long run, the change in supply is longer, right? it's this one...